Thursday, July 25, 2013

When It Comes to Class Arbitration, the New Boss Is the Old Boss if the Claim Has Already Accrued

Avery v. Integrated Healthcare Holdings, Inc., No. G046202 (D4d3 July 23, 2013)

In a largely fact-bound case, the court upheld a trial court’s ruling that plaintiff/employees were not be bound by class action waiving arbitration clauses in their employment agreements and the resulting denial of company’s motion to compel arbitration.

According to the court, the revisions to the employee handbooks containing the class action waivers were instituted after the class plaintiffs’ claims had accrued, and because the employees had not been given notice of those changes. The court stressed that the timing issue regarding the applicability of the revised policy was based on the date of the accrual of the claims, not the filing of the resulting actions, because retroactive application would violate the covenant of good faith and fair dealing. The Court further rejected the company’s argument that the plaintiff entered an implied-in-fact contract to arbitrate under the agreement by continuing to work, because the trial court’s findings that the employee had not actually been informed that the arbitration agreement was a condition of continued employment were supported by substantial evidence. Finally, the court upheld the denial of an alternative motion to compel based on the earlier version of the arbitration policy allegedly contained in a prior version of the employee handbook because the employer had failed to prove the terms of the agreement were sufficiently incorporated by reference into any agreement that was actually entered into by the employee.

Affirmed.

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